What is Brand Loyalty

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Creating Brand Loyalty An insight into the concept of brand loyalty and how this can be created by means of a virtual community

Transcript of What is Brand Loyalty

Page 1: What is Brand Loyalty

Creating Brand Loyalty

An insight into the concept of brand loyalty and how this can be created by means of a virtual

community

Page 2: What is Brand Loyalty

Creating Brand Loyalty

Af Anne Albrekt

Vejleder: Line Skjødt

BaMMC ThesisASB. Department of Language and Business CommunicationHandelshøjskolen, Århus Universitet2010Number of characters: 52882

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AbstractFor many years marketing has been dominated by the marketing mix, and in many

ways still is. However, since the 1980’ies a shift in paradigm from a very product-

centric approach to an emphasis on customer needs and creating long-term

relationships with customers occurred. In the light of this, the concept of brand loyalty

was developed as a means of conducting relationship marketing. Furthermore, the use

of virtual communities today is a common approach of many companies. Based on

this, the following problem statement was formed:

This thesis will discuss the concept of brand loyalty and, based on an analysis of

Nike’s virtual community Nikerunning.com, investigate how this can be created by

means of a virtual community. Furthermore, the analysis will determine whether

Nikerunning.com from a theoretical perspective can be considered successful.

The research approach will be conducted on the basis of Social Contructionism. This

scientific method seeks to construct knowledge between other people and thereby

create its own interpretation and critiques. This approach is applicable in discussing

the aspect of brand loyalty as well as analysing the successfulness of

Nikerunning.com since it allows for the author to take a critical stance towards the

concept based on knowledge collected on different author’s research.

In the discussion on brand loyalty, different definitions and perspectives as well as the

objectives of the concept will be introduced and discussed. Based on this, the reader

should be able to gain an insight into the concept as a whole. Furthermore, as a

foundation for the analysis Gommans’, Krishnan’s and Sheffold’s (2001) framework

on how to create e-loyalty is used. This framework covers all aspects necessary to

consider when aiming to establish loyalty online. Thereby the framework is useful in

the analysis of the successfulness of Nikerunning.com, as well as for giving advise on

improvements. To support the framework, and in order to conduct a more thorough

analysis, the concept of Word-of-Mouth will be discussed in relation to investigating

the outcome of Nikerunning.com’s forum. Furthermore, the Two-way communication

model, developed by Lazarsfeld and Katz (1955), serves useful analysing the effect of

Nike’s interference of the discussions at Nikerunning.com. Futhermore it will also be

used to determine the effect of using celebrities as messengers of the website and

finally to based my advise on how to improve the image of Nikerunning.com.

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It was found that the concept of brand loyalty was widely discussed and several

authors had different opinions on how it must be defined. Some authors argues that

loyalty should be divided into different levels and adapt the treatment of the

customers accordingly, whereas others argues that the phenomenon is either existing

or not. Futhermore, it was argued that when measuring brand loyalty both the aspect

of behavioural loyalty being repeat purchasing patterns and attitudinal loyalty i.e. the

commitment and preferences of a brand should be combined in order to obtain a

unified result. The objectives behind brand loyalty were found to be somewhat similar

and agreed upon. With increased brand loyalty among customers follows reduced

costs in terms of attracting new customers. However, the costs will also be reduced

due to the fact that loyal customers are less price sensitive and therefore allowing for

higher prices to be charged. Finally, by creating loyalty among the customers, a

company will enhance the competitiveness since the change of repeat purchase

becomes higher.

The analysis on Nikerunnning.com revealed that there are various ways of creating

brand loyalty by means of a virtual community. Through the interaction within a

virtual community a long-term relationship between the customer and a company can

be created, which will lead to enhanced brand loyalty. Secondly, a virtual community

can fulfil certain customer needs which results in improved customer satisfaction and

thereby loyalty. Finally, within a virtual community it is possible to improve the

customisation of both products and service which also has proven to have a positive

effect on brand loyalty.

Based on the theoretical findings, Nikerunning.com was found to be a successful

virtual community due to its professional construction. However, due to customer

needs on customisation a recommendation would be to enhance this aspect on the

website in order to increase the brand loyalty.

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1. Introduction..................................................................................................................... 5

1.2 Methodology and structure...............................................................................51.3 Scientific method................................................................................................61.4 Limitations..........................................................................................................71.5 Problem statement.............................................................................................7

2. Discussion of the concept of brand loyalty...........................................................8

2.1 From mass marketing to relationship marketing...........................................82.2 Brand loyalty....................................................................................................10

3. Discussion of theory..................................................................................................... 13

3.1 A conceptual framework of how to create E-loyalty....................................133. 2 Word Of Mouth...............................................................................................153.3 The Two-step model of communication.........................................................163.4 Virtual communities/brand communities:.....................................................17

4. Analysis of Nike’s virtual community Nikerunning.com...............................20

4.1 Value Propositions...........................................................................................204.2 Brand Building.................................................................................................224.3 Trust and Security...........................................................................................254.4 Customer Service.............................................................................................274.5 Website & Technology.....................................................................................294.6 Conclusion on analysis.....................................................................................32

5. Conclusion...................................................................................................................... 33

6. Bibliography.................................................................................................................. 35

7. Appendix 1..................................................................................................................... 38

8. Appendix 2..................................................................................................................... 39

9. Appendix 3..................................................................................................................... 40

10. Appendix 4................................................................................................................... 41

12. Appendix 5................................................................................................................... 42

12. Appendix 6................................................................................................................... 43

13. Appendix 7................................................................................................................... 44

14. Appendix 8................................................................................................................. 45

15. Appendix 9................................................................................................................. 46

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1. IntroductionThe marketing mix has dominated the way marketing has been conducted for several

years and still is an accepted and used concept. However, since the late 1980’ies an

emphasis on the relationship between companies and customers and in the light of

this, the limitations of the 4 P’s model have been highlighted. The main issue with the

marketing mix was that it now began to be seen as product-centric and a creature of

the heyday of mass marketing. This traditional marketing theory started to get an

inherent short-term transactional emphasis which began to cause a concern among

several researchers (Payne, 1997). These saw that, especially in industrial and service

business-to-business marketing, there were a need for establishing and maintaining

long-term relationships with the customers in order to be successful (Payne, 1997). As

a result of this it led to a shift from solely focusing on the core product and its

physical attributes, to a focus towards the customers and their specific needs (Chaffey,

2009).

1.2 Methodology and structureIn the rise of this paradigm and its popularity, several authors have come with their

suggestions on how to best create long-term relationships with the customers and the

ones most applicable to the discussion in this theory will be introduced.

This thesis will both be a discussion on the concept of brand loyalty and an analysis

that will demonstrate how it can be created in a virtual community. The analysis will

be conduced on the case of Nike’s virtual community Nikerunning.com and besides

demonstrating how brand loyalty can be created it will also discuss whether

Nikerunning.com can be considered successful from a theoretical perspective.

The first chapter will be a discussion on the term brand loyalty. Since the discussion

as well as analysis is based upon brand loyalty in a virtual community, a framework,

conducted by Gommans, Krishnan and Sheffold (2001) on how to create e-loyalty

will be introduced. Within this framework other relevant theories will be introduced

and discussed in order to expand it with the opinion of other researchers. The first

concept that will be discussed is Word-of-Mouth (WOM) as this becomes a part of the

interactivity that takes place in a virtual community and which will be discussed, has

a huge effect on brand loyalty. Furthermore, Lazarsfeld’s and Katz’ (2006) theory of

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the Two-step model of communication will be introduced since it relates to the

concept of WOM. Furthermore, the model will also become beneficial to the analysis

of Nikerunning.com by demonstrating how certain individuals are able to

communicate a message effectively. Finally, the model will be used to give my

personal advise on how to improve certain aspects of the marketing efforts. Finally

the concept of virtual community will be introduced and discussed in order to

illustrate the connection between a brand loyalty strategy and a virtual community. In

combination these aspects will be used to determine the successfulness of

Nikerunning.com.

Certain groups will be able to benefit from the founding’s of this thesis. Firstly,

organisations will be given an idea on how to create loyalty around their brand,

especially in an online context. Futhermore, students at universities will be able to

learn from this thesis what the concept of brand loyalty is about, and with the different

views and the discussion upon it, create their own interpretation on the term. The

analysis illustrates how organisations utilises the concept in real life, which often

helps to gain a better understanding of the concept as a whole.

1.3 Scientific methodIn this thesis the view of Social Contructionism will function as foundation for the

choice of methods used to attain the knowledge required for answering the problem

statement. A common view within Social Constructionism is that our ways of

understanding the world does not come from objective reality but from other people,

meaning that knowledge is constructed between people (Buhr, 2001). In the search for

answers to the problem statement, this approach will be used by analysing and

comparing various theoretical views, and thereby creating my own interpretation and

knowledge on the subject. Furthermore, the Social Constructionist view invites us to

be critical of the idea that our observations of the world unproblematically yield its

nature to us and to challenge the view that conventional knowledge is based upon

objective, unbiased observation of the world (Buhr, 2001). This means that it is

crucial take a critical stance towards the sources as well as theories used throughout

the thesis and therefore both advantages and obstacles of the different material applied

will be highlighted.

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1.4 LimitationsDue to the short amount of space the discussion as well as analysis will be conducted

on a limited number of theories in order to make it thorough. There are several models

that can be applied to illustrate how brand loyalty potentially can be created and

managed, however only the most relevant in the discussion of brand loyalty in an

online context will be applied. It would have been interesting to use discourse analysis

to investigate what message Nike is trying to send their customers, and how the

customers respond to this message. This would be beneficial in analysing whether

Nike’s attempt to create loyalty is actually working.

1.5 Problem statement

This thesis will discuss the concept of brand loyalty and, based on an analysis of

Nike’s virtual community Nikerunning.com, investigate how this can be created

by means of a virtual community. Furthermore, the analysis will determine

whether Nikerunning.com from a theoretical perspective can be considered

successful.

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2. Discussion of the concept of brand loyaltyIn the following chapter the discussion on the concept of brand loyalty will be carried

out. The discussion will begin with an introduction of the concept of relationship

marketing in order to give an insight into how the term has originated and to create a

more complete picture.

2.1 From mass marketing to relationship marketingThe change of mass marketing towards the importance of creating long-term

relationships with the customers has lead to a new term referred to as Relationship

Marketing. This concept has been, and is still, widely discussed and as a result of this,

has throughout the years been further build upon. There are many different definitions

on the concept, some of which covers many of the same aspects and others that

overlap. According to Chaffey (2009), the overall concept is referred to as Customer

Relationship Management. Customer Relationship Management covers the overall

concept and includes aspects such as Direct Marketing, Relationship Marketing,

Database Marketing, and One-to-One Marketing (See appendix 1). Also Payne

(1997) argues that the many categories within the field should be placed under one

main term that covers all aspects. Additionally, Payne argues that since the

relationship marketing paradigm reflects a change from traditional marketing to a

customer-focused management, the term relationship marketing embraces an

organisation-wide perspective of marketing rather than a narrow functional focus.

Thus, a more appropriate term would be Relationship Management.

In the following the definition referred to will be relationship marketing since this

term is more commonly used.

Relationship marketing covers a broad range of approaches that in corporation are to

fulfil a common goal. Grönroos (1996) defines the term of relationship marketing in

the following way

Marketing is to establish, maintain, and enhance relationships with customers

and other partners, at a profit, so that the objectives of the parties involved

are met. This is achieved by a mutual exchange and fulfillment of promises

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At the same time Berry’s (1995) definition on the subject is somewhat shorter and

simply argues that relationship marketing has the objective of:

…attracting, maintaining, and enhancing customer relationships.

Finally Morgan and Hunt (1994) suggests the following:

Relationship marketing refers to all marketing activities directed toward establishing,

developing, and maintaining successful relationships

Even though these definitions to some extent are different, they all agree on the fact

that the main objective of relationship marketing is to establish, develop, and maintain

a relationship with the customers.

Based on the above definition there is little attention towards the product. However,

Aaker (1996) claims that the core and extended product should always be consistent

with the marketing efforts. The core product being the physical product itself and the

extended product being the physiological attributes it brings with it. This means that

physical product must communicate the same as its physiological attributes and

therefore focus should be on both the identity of the product as well as its physical

qualities.

Another issue that should be discussed is whether a relationship marketing strategy is

always applicable. According to Kotler and Keller (2009) when dealing with products

that allow for little variation the focus is on the core product. An example of this

could be a commodity product which rarely involves any psychological attributes to

the product itself (Aaker, 1991). A product of this category is often very price-

sensitive and therefore a focus on the marketing mix is more appropriate since the

customers will purchase the product with respect to features, price and convenience

(Aaker 1991).

However when dealing with products that rely on its image and equity, relationship

marketing becomes relevant. This is supported by Berry (Payne, 1997) who argues

that

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Relationship marketing is applicable when there is an ongoing and periodic

desire for the service and when the customer controls the selection of a service

supplier and has alternatives from which to choose.

In terms of Aakers (1996) findings on brand identity this means that the product

dealing with should be of a category where there is a high focus on the extended

identity and where the service that follows the product is just as valuable.

As the concept of relationship marketing has now been introduced, the main

perspective of the thesis, brand loyalty, will be introduced in the following.

2.2 Brand loyaltyBrand loyalty is a sub-category and outcome of relationship marketing. According to

Keller (1993) brand loyalty can be defined as

…The repeated purchase behaviour presented over a period of time driven by

a favorable attitude towards the subject.

This view is disagreed upon by Jakoby and Chestnut (1778) who argues that the

behavioural aspect of loyalty research merely focuses on repeat purchasing which

only reflects the outcome of a decision in which the emotional, attitudinal facet of

loyalty is disregarded. However, this argument will be elaborated on later.

Pickton and Broderick (2005) understand that brand loyalty is not only a question of

purchase behaviour but that attitude towards the brand also plays a significant role.

They therefore argue that brand loyalty is:

The degree of loyalty a customer has towards a brand in favouring it over

other alternatives. It is something that companies endeavour to encourage but

given the competitive environment frequently find that customers are not so

loyal to a single brand.

In this definition Pickton and Broderick (2005) acknowledges the complex nature of

creating loyalty among customers in a world where competition is tough and where

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the customers are being exposed to numerous of different brands everyday. This view

on loyalty is criticised by Jiyoung, Byoungho and Swinney (2009) who claims that a

true loyal customer is found to have commitment and attachment towards the brand

and is not easily distracted to a slightly more attractive alternative. Thereby arguing

that loyalty cannot be seen as either excising or not. Both Aaker (1991) and Chaffey

(2009) disagrees on this and instead argues that there are several levels of loyalty that

varies between the customers and that these should be treated differently accordingly

According to Ki-Joon Back and Sarah C. Parks (1993) brand loyalty can be divided

into behavioural and attitudinal loyalty. Behavioural loyalty is defined as a customer’s

overt behaviour toward a specific brand in terms of repeat purchasing patterns. The

behavioural approach is often used in predicting the customer’s purchasing behaviour

in the future. However, according to Dick and Basu (1994) the behavioural approach

neglects the importance of the customer’s decision-making process and therefore does

not differentiate itself from merely repeat purchasing behaviour. Because of this brand

loyalty must also be categorised into attitudinal brand loyalty. In attitudinal brand

loyalty the focus is on trust and is based on operational findings rather than theoretical

findings. In other words, attitudinal loyalty is based upon the customer’s commitment

and preferences to when considering unique values associated with a brand

(Chaudhuri & Holbrook, 2001). However, because of the fact that the attitudinal

approach is based upon operational findings, it is also claimed that it lacks construct

validity. Several researchers (Bowen & Chen, 2001; Jacoby & Chestnut, 1978; Stern,

1997) argue that the different aspects of behavioural and attitudinal brand loyalty

must be combined and thereby develop measures on brand loyalty on both. In other

words this means that the measure on brand loyalty must both be based on repeat

purchase behaviour as well as the cognitive attitude towards a specific brand.

There has found to be several advantages of creating brand loyalty. Aaker (1991)

argues is that for any business it is expensive to gain new customers and relatively

inexpensive to keep existing ones, especially when the existing customers are satisfied

with, or even like the brand. Moreover, according to Kotler, Bowen & Makens,

(1998) brand loyalty customers will reduce the marketing costs that are associated

with attracting new customers. Retention is one of the main objectives in relationship

marketing and brand loyalty serves to fulfil this goal. Long-time customers are less

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price sensitive and therefore permitting higher prices to be charged (Payne, 1997). As

can be seen, brand loyalty brings with it several opportunities but in some instances it

might even be considered a necessity. According to Light and Morgan (2005) it is not

the brand itself that is the asset but in fact the actual value lies within the loyalty of

the brand. If a brand does not succeed in creating loyalty among its customers it is

nothing more than a trademark or an identifiable symbol with only little value.

To conclude on the above, loyalty not only serves as a competitive advantage but can

also help to reduce costs in more than one area and is thereby in many marketing

strategies a remarkable advantage.

As the concept of brand loyalty, as well as the objectives behind it, have now been

discussed the most relevant theories in relation to the case of Nikerunning.com will be

introduced in the following.

3. Discussion of theoryIn the following the different concepts and models that will be used as part of the

analysis and recommendations will be introduced and discussed.

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3.1 A conceptual framework of how to create E-loyaltyAs the case of Nikerunning.com will be analysed it is crucial draw on a model that

demonstrates how loyalty can be created in an online context. Gommans, Krishnan

and Sheffold (2001) introduced a framework that covers all aspects to consider on a

webpage when aiming to create and enhance brand loyalty among customers (See

appendix 4).

A downfall to this framework is that none of the authors have any particular

background within the publishing of journals concerning brand loyalty. The concern

regarding this is the lack of credibility of the journal and how valid the arguments

then appear to be. However the journal was published in the Journal of Economic and

Social Research at Indiana University of Pennsylvania which is a highly respected

university and therefore must be seen as a reliable source. Another issue with the

framework is that it appears to be relatively simple and in some areas too superficial.

However, with the combination of other theories and concept the framework becomes

useful as a foundation of different characteristics to bear in mind in the creation of

brand loyalty in an online context.

In the following the framework will be introduced and discussed in its chronological

order to provide an overview of how the analysis will be structured.

The model consists of 5 main drivers: Value Propositions, Brand Building, Trust and

Security, Website and Technology, and Customer Service.

Value Propositions deals with product customization and interactivity. Research

shows that a majority of web shoppers prefer websites that offer customised products

and information and the Internet is more capable in fulfilling this need than any other

medium. Additionally, a high involvement in the product development creates a

stronger relationship with the brand eventually resulting in brand loyalty.

Furthermore, Gommans, Krishnan and Scheffold (2001) argue that brand loyalty in an

online environment will lead to a certain degree of immunity from price-based

competition and brand switching which is relatively difficult to obtain in a place

where competition is only a click away.

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The next driver is Brand Building. The Internet offers unique possibilities of

interactive brand building, for example virtual communities which are obviously not

available through traditional media. Also, both domain names and website content

play a significant role in enhancing the overall brand image. In relation to the analysis

the concept of Word-of Mouth (WOM) will be used to demonstrate the outcome of

the customer interaction. Furthermore, Lazarsfeld’s and Katz’ (2006) model of Two-

step model of communication will be applied in order to show the effect of the usage

of celebrities in the promotion material.

The next dimension deals with Trust and Security which is very important when

dealing with online transactions. Due to the fact that customers are not able to

physically see the product or the salesperson, the Internet brings with it some

obstacles. Therefore, when it comes to online transactions the need to convince the

customers that the Internet is a safe marketplace becomes necessary.

There are different ways of enhancing the online security such as third party

approvals, encryption, authentication, and non-repudiation strategies which all serves

to create trust for the customers.

The fourth element involves Website and Technology. The first impression given

when visiting a website is crucial for further visits. Navigation, fast page loads, server

reliability, quick shopping and checkout processes as well as a personalised interface

are all aspects that enhances the loyalty towards the website. Futhermore, a website

should be designed in relation to the target group meaning that the content has to fulfil

the needs of the customers. This includes aspects such as language and changing the

content to suit local conditions Another important issue is that the organisation has to

know the motives of the visits, for example whether is it to gather information or if

the visitor enters the webpage with the intent to buy. The elements of the webpage

should then be placed in relation to this.

Finally, there is the last aspect of Customer Service. Firstly, Customer Service

revolves around the area of logistics. The logistics system should be able to guarantee

a fast delivery as this will contribute to loyal behaviour. It is also important that the

system allows for different ways of delivering the products. The customers will have

different preferences in relation to delivery and these needs should, as far as possible,

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be fulfilled. Another aspect in this category is information regarding the website and

its products. By establishing a customer service system such as for example a link to

Frequently Asked Questions as well as links to online representatives serves useful in

order to assist the customers in the selection of the buying process. According to

Chaffey (2009) to even further the service and thereby enhancing the loyalty,

customer touchpoints serve useful. A touchpoint could include a toll free phone

number for customers or e-mail which gives the customers a feeling of security since

they will be able to communicate directly with a salesperson.

3. 2 Word Of Mouth

According to Pickton and Broderick (2005) Word Of Mouth (WOM) is:

Communication not originated by the sender that is passed on to others after the

original marketing communication messages have been transmitted.

When WOM takes place in an online context, as in this instance, the concept is

referred to as Word of Mouse (Pickton & Broderick, 2005) however for the sake of

simplicity the original term Word-of-Mouth will be used.

According to several researchers WOM is one of the most effective kinds of

promotion (Buttle 1998). The reason why WOM is seen as having such a powerful

effect is, according to Mangold (Buttle 1998) that it creates an emphatic influence on

the purchase decision because of the fact that personal sources are viewed as more

trustworthy. Furthermore, according to Buttle (1998) WOM has shown to influence

several areas such as awareness, expectations, perceptions, attitudes, behavioural

intentions and behaviour which also proves how powerful it can be. Positive WOM is

created when the customers become loyal to the brand and therefore creates an

interest of expressing themselves via the brand.

A downfall of WOM is that, due to the massive power it has on other customer’s

behaviour, it can also serve to be extremely destructive. In fact according to Arndt

(Buttle, 1998) negative WOM has a more powerful impact than positive WOM and

dissatisfied customers are likely to tell twice as many people as satisfied customers.

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This means that companies should to consider the risks of establishing a medium that

generates WOM because it do not have any influence or control on what the

consumers are going to communicate to others.

3.3 The Two-step model of communicationIn their book Personal Influence from 1955 Lazarsfeld and Katz introduced the theory

of the two-step model of communication which today still remains one the most

useful models within planned communication (see appendix 3). In the Two-step

model of communication Lazarsfeld and Katz (Windahl & Signitzer, 2006) argues

that certain opinion leaders perform the functions of receiving, processing, and

disseminating information. These opinion leaders are often chosen because of their

expertise and image within a certain area, thereby appearing as trustworthy sources to

the opinion followers who are the people within the target group.

The model recognises that individuals receive information from each other within a

communication environment as well as from mass media, and structures the process

by which messages move through mass media and interpersonal channels from source

to receiver. The opinion leaders that communicate the messages to the so-called

opinion followers appear more influential than do the media. According to research

done by Brand New World (Chaffey, 2009) personal recommendations was ranked

with 67% of importance when researching or considering a product or service and

reviews/opinions on the Internet written by experts with 50%. This research supports

Lazerzfelds and Katz’ theory as well as the concept of WOM as it shows how much

influence and power other people’s saying have on behaviour and attitude. A critique

on this model is that in the online context that this thesis is dealing with, the model

might not be perfectly applicable due to the fact that the Two-step model of

communication functions as a one-to-many medium whereas potentially, digital

media provide a one-to-one communication. This relates to the concept of mass-

customisation where the Internet has proven to be an effective medium to create this

as it allows companies to easily communicate personally with the customers. But as

will be exemplified later, Nike is only to some extent utilising the concept of mass

customisation. Furthermore according to Chaffey (2009) the potential of it has not yet

been fully developed since many companies are still using the Internet to provide

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standardised information to a general audience. Therefore, the model is still valid in

the analysis of how Nike uses opinion leaders to communicate its messages.

The theory of the theory the Two-step model of communication will be used in

relation to the case of Nikerunning.com where it functions as a tool to analyse how

celebrities are being used as opinion leaders in the promotion of Nikerunning.com and

what the effect of this. It will furthermore be used to give advise on how to effectively

use opinion leaders in order to create positive WOM.

3.4 Virtual communities/brand communities:The term ‘virtual community,' was developed by Internet pioneer Howard Rheingold

(1993), who defined it as:

social aggregations that emerge from the net when enough people carry on...

public discussions long enough, with sufficient human feeling, to form webs of

personal relationships in cyberspace.

Moreover, according to Chaffey (2009) a virtual community is

An Internet-based forum for special interest groups to communicate.

This approach may be seen fairly simple and others argue that the definition is more

complex. Komito (1998) argues that

The term virtual communities usefully refers to online groups of people who either

share norms of behaviour or certain defining practices, who actively enforce certain

moral standards, who intentionally attempt to found a community, or who simply

coexist in close proximity to one another.

Even though the above definitions are clearly different, what is agreed upon is the fact

that a virtual community consists of a group of people who share a common interest

and behaviour, and because of this interact with each other via the Internet with aim

of sharing a sense of community.

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According to Markus (2002) virtual communities are categorized based on their

social, professional and commercial orientation. In social communities, personal

relationships of a non-professional nature are created. Often, these communities

evolve around leisure activities, hobbies or other non-professional interests. In

professional communities, member relations are formed around shared professional

interests. These communities include expert-based knowledge networks and student-

based learning communities. However, the concept of the organisation-sponsored

community extends beyond Markus’s notion of commercial communities by

recognizing that communities could also be sponsored by non-profit organizations and

government agencies.

There are several advantages in virtual communities and by allowing the consumers to

interact in a virtual community these serve as being two-fold. For the consumers it is

obvious that they have the opportunity to engage with other people who share their

interest and in that way create a community. According to Porter (2004) Tönnies

argued in 1967 that being a part of some sort of community can both function as

intrinsic and extrinsic motivation. Depending on the purpose, it can function as a

society for social needs or as a mean to further individual goals. This brings with it

the opportunity for organisations to attract consumers to their website because they

are able to provide them with both of these motivations.

Looking beyond psychological advantages, the consumers as well as organisations

will also have the opportunity to explore the attributes of the actual product by the

experience of other consumers and information given by the organisation and thereby

to a higher extend benefit from the product.

In relation to the advantages there are to companies, Armstrong & Hagel (1995)

argues that a virtual community can lead to a more effective market segmentation

because it allows for the organisation to more easily figure out whom its core

customers are and collect useful information on these. The information provided on

for example a web-blog also proves extremely useful for the company because this

can reveal the specific needs and wants from certain customers. This is where the

aspect of mass customisation becomes relevant because the organisation will be able

to discover customer needs as well as direct its marketing approaches specifically to

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certain customers. However, a more comprehensive discussion of this will be given

later.

Interactivity, hence the Internet enabling a dialogue between a company and the

customer, functions as a mean of developing long-term relationships with customers.

Furthermore, Chaffey (2009) introduces the term trialogue which is the interaction

between a company, the customer, and other customers facilitated through an online

community, social networks, reviews, and comments. Chaffey (2009) argues that this

trialouge will influence every aspect of marketing, from product design through to

product recommendatio. The benefits of this aspect serves twofold because a

company will be able to utilise the information given by customers and by allowing

the customers to have a say they will feel appreciated and as a result increase their

loyalty.

4. Analysis of Nike’s virtual community Nikerunning.comThis section will be an analysis of Nike’s virtual community Nikerunning.com.

Nike’s virtual community functions as a separate website but with a clear connection

to the main website both in terms of visual attributes and a direct link.

Nikerunning.com functions both as a community of information sharing among

customers and employees from Nike as well as an online shop. The direct link and

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visual connection from Nike’s main webpage and to Nikerunning.com (as well as

other Nike webpages such as Nikebiz.com) clearly reveals Nike’s multichannel

marketing strategy where different channels are integrated and support each other in

their proposition development and communication (Chaffey, 2009). The website’s

main objective to function as a community with the interest of running. The reason

why this webpage has been chosen is that Nike is an interesting company when it

comes to both virtual communities and relationship marketing. Nike’s virtual

community have been massively exposed in the media and a big part of its marketing

initiatives. Besides having a strong emphasis on Nikerunning.com, Nikerunning.com

is an interesting case to analyse because it is highly affected by other aspects of the

company such as its unique image and the way it chooses to market itself. In the

following the framework of how to create e-loyalty will be used as a foundation for

the analysis.

4.1 Value PropositionsThe Value Propositions is the first step to analyse. Nike being a MNC makes it more

difficult to offer customised products than for a smaller company, and its image may

easily be perceived as commercial. Therefore, in its marketing efforts Nike is very

concerned with communicating that customised products are being offered. Product-

wise Nike does offer certain products that are clearly mass customised in that

customers are able to choose from limited number of choices. However within the

forums it becomes obvious that Nike has employees answering questions from

customers. Thereby Nike is offering customised information regarding the products

which brings credibility towards the products because it functions as an extra service,

and at the same time making the customers able relate to the company. This because

the customers will be personally able to communicate and form some kind of

relationship with Nike. Another advantage that the personal guidance brings is a more

complete experience of the customised product making it become more personalised.

By offering the customers specialised information, which can be seen as a service, via

their virtual community, the customers will be left with a feeling of a special

treatment, eventually leading to loyalty towards the brand and company. This

argument is supported by Sivadas and Baker-Prewitt (2000). Additionally they

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developed a model which illustrates several of the arguments within this thesis of

what enhanced service towards the customers can lead to (see appendix 6).

Another important issue, according to this framework, is that an online company

should offer a large set of product choices and guarantees as well as a high product

quality. The product choices are relatively large, however, having a specialised area

within running, one could argue that this is expected from the customers. When it

comes to quality Nike has the advantage of being a bricks-to-clicks company. This

means that Nike has gone from being a company with physical presence to expanding

to online presence. Thereby Nike functions as an already established brand with

customers that have already had experience with the products. This view is supported

by Chaffey (2009) who argues that online shoppers prefer shopping at websites

operated by established high-street retailers as these understand what a brand means

in terms of value and the physical part of the operation gives an increased sense of

security. However, as already mentioned, online shopping often brings with it some

insecurity and therefore, regardless of reputation, there is always a need to guarantee

that the return policy is manageable. Nike’s return policy can be viewed after placing

the products in the shopping cart and entering the checkout and payment site. It

reveals that it is similar to that of the physical stores with the end premises. As the

guarantees are similar to those of the physical stores, a good idea might be to

highlight this at an earlier stage as this will show that Nike is an honest company and

thereby making the online shopping experience seem trustworthy.

An obstacle with having a virtual community and an online shop within one website is

that it might in the eye of the consumer seem to be market oriented. Additionally, to

become a part of Nikerunning.com the customers will need to at least buy a certain

chip, and possibly other products from Nike in order to trace the runs. It is possible to

participate in the forum without having to buy the chip, however most of the subjects

deal with the challenges and how to utilise these products. This might cause

discontent for the critical consumer since it is first revealed after signing up for

Nikerunning.com and not through the TV commercials. Thereby Nike may appear to

dishonest and thereby loose certain customers.

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To conclude on the value propositions, the findings were that the forum at

Nikerunning.com is helpful in improving the customisation that Nike puts great

emphasis on. The customisation on the product itself is limited, however combined

with the guidance of the employees at Nike, the customers will be left with a feeling

of special treatment and knowledge of how to best possible utilise the products which

will lead to brand loyalty.

A possible concern within Nikerunning.com is that it is not communicated clearly

before signing up as a member that certain products are obligatory which can result in

dissatisfaction. Based on this there are certain aspects that Nike should consider

changing in order to appear more credible.

4.2 Brand BuildingThe next driver in the framework, Brand Building, functions as a very important

aspect of this analysis as it will be supported by the two-step model of communication

as well as the concept of Word-of-Mouth (WOM). Moreover Nike has a very strong

focus on brand identity which is also visible at Nikerunning.com.

As can be seen from the website title Nikerunning.com the company name is a part of

the address. The fact that an established name is incorporated within the website title

makes it more credible to new customers as these are able to relate to the name as

well as knowing what quality to expect from the website. The fact that Nike offers the

customer to involve and interact both with employees and other customers gives rise

to the analysis of the WOM that is taking place within the forums on

Nikerunning.com. The forum is a mixture of customers and employees of Nike

interacting, thereby functioning as an organisation-sponsored community that creates

relationships both between customers and Nike. By mixing interactivity both with

customers and employees the community functions as an expert-based knowledge

network as well as a student-based learning community as exemplified earlier. The

objective behind this kind of mixture might be that Nike is able, to some extent,

control what is being posted in the forums and also keep the negative WOM down by

providing help to the customers. The discussions are initiated by the customers, most

of them are related to problems or help to some kind of issue. The fact that Nike

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allows for customers to reply to each other creates a shared community for these. Due

to this, an outcome of Nikerunning.com is that it functions as a society that can fulfil

social needs among customers. By allowing employees to participate in the

discussions and functioning as professionals that offer guidance creates some kind of

credibility as their postings are seen as expert knowledge. However it also has the

affect that Nikerunning.com appears to be marked oriented. To the critical customer,

this can easily become a problem since he/she might question the Nike’s intentions,

hence whether Nikerunning.com is merely another attempt to gain revenue.

Therefore, Nike should be careful in not becoming too dominating within the forum

and only be present when their expertise is required from the customers.

Nikerunning.com has expanded its concept of social networking to Facebook and

Twitter and on the front page invites the customers to join these networks. The result

of this is more exposure because the members will also be met with news and updates

when visiting these networks. Futhermore another outcome of using these is that they

will catch the attention of the customers and awake their interest in visiting

Nikerunning.com. Another benefit for Nike is that by entering these social network

sites the friends of Nike customers will also be exposed to Nikerunning.com and

possibly visit the site. In that way Nike is again utilising the concept of WOM.

As mentioned above, when looking at the postings within the forum, most of these

include problems with the products or the technology on the website which could

possibly lead to negative WOM. The fact that the replies are supported by an

employee, who provides information and guidance, might help to avoid negative

WOM. The fact that Nike is able to control what is being replied is a visible proof that

the organisation is not comfortable with entrusting the interaction completely to the

customers. Even though this could be viewed negatively by the customers it can also

serve beneficial to them because Nike will provide them with the information

necessary to utilise the products. Thereby making the advantages two-fold since both

Nike and the customers can benefit from it as Nike, via their interaction, can control

the negative WOM.

In relation to the fact that Nike’s employees interact in the forum and besides this uses

celebrity front figures in the marketing efforts the Two-step model of communication

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will now be used to analyse what message Nike is trying to send to its customers

about Nikerunning.com. Furthermore the model will be used as foundation to advise

on how to best utilise the power of the opinion leaders.

As part of a serious of TV commercials for Nikerunning.com the (see appendix 9),

Nike used Eva Longoria and her partner Tony Parker, who is a professional basketball

player, as participants of the challenge as well as other famous athletics. According to

Lazarsfeld’s and Katz’ model these function as opinion leaders that pass on the

message of entering Nikerunning.com to the target group who then functions as

opinion followers. As mentioned earlier, the credibility and trustworthiness of opinion

leaders is high, thereby making their communication efforts very powerful. These

opinion leaders become powerful because of their professions as athletes and because

their image corresponds with that of Nike. The fact that Nike chooses to place these

athletes in another context than their own makes them more relatable because they in

the sport of running are ordinary people. This has a two-fold effect; firstly the

customer’s attention will be drawn to Nikerunning.com due to the power of the

opinion leaders. Secondly, Nikerunning.com becomes relatable because the opinion

leaders are displaying themselves in a situation where they are no longer superior to

the customers.

A critique of using these people as opinion leaders is that these may not be relatable to

the entire target group. Running is a sport that attracts a very broad area of people

which means that many, within the target group, might not be interested in sport in the

television. Therefore the opinion leaders may not be able to pass on Nike’s message

to the entire target group and some loyal customers will not be able to relate to

Nikerunning.com from the advertising material. This also corresponds with a critique

of the two-step model of communication where it becomes apparent that mass

communication is not just a matter of communication between media and the

audience but that the mass communicator’s message may travel in unforeseen ways.

Therefore, the implication for the communication planner is to look outside routine

mass communication boundaries for communication solutions. Based on this critique

an advice would be to use a group of opinion leaders that have a broader set of

professions, but at the same time maintaining the connection between these and the

image of Nike. Politicians from different parties would be a solution since these will

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definitely attract a broader set of customers, and would also suit the challenges of

competing against each other.

To conclude on the findings on Brand Building it was found that the forum is highly

affected by WOM both positively and negatively. The fact that Nike uses its own

employees as part of the interaction has both implications as well as advantages. Nike

will, to a certain degree, be able to control the negative postings by replying to the

critique and providing helpful answers, thereby also create credibility. However, the

potential threat of this is that customers might question the intention of

Nikerunning.com since they are not able to communicate freely without intervention

from Nike. Thereby Nike can appear somehow market oriented.

Additionally using certain opinion leaders also has advantages and disadvantages. By

placing the opinion leaders outside their normal context makes Nikerunning.com

more relatable since opinion leaders and followers are then on the same level.

However the issue is that perhaps not all customers are able to relate to the opinion

leaders used and therefore an advice would be to use a broader spectrum of opinion

leaders and thereby attract a broader group.

4.3 Trust and SecurityAccording to Jiyoung, Byoungho, & Swinney (2009), Gabarino and Johnson

conceptualises trust as:

Customer confidence in the quality and reliability of the service offered.

They furthermore argue that trust plays a significant role in creating loyalty. His

studies reveals that e-satisfaction and e-trust influence e-loyalty either individually or

in a sequential order (see Appendix 7). Therefore, even though the aspects that are to

develop trust and security might not be as obvious as for example those of brand

building, they serve to be just as important.

With Nike being a well-established Multinational company (MNC), it could be argued

that it brings with it some credibility which can be turned into a certain level of trust

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towards the webpage. However, another aspect is trust towards the general usability

of the website and the risk of others invading and misusing it. According to Chaffey

(2009) trust needs to be increased and perceived risk must be decreased for customers

to develop positive beliefs in the company’s online reputation. As Nikerunning.com

functions both as a virtual community and as a website for online transactions there

are some safety aspects that Nike is obligated to consider. As already mentioned,

there are different ways of making sure that the online market place is safe and

thereby enhancing the trust from customers. Nikerunning.com is secured by Entrust

DIGITAL Security, which is shown by an icon that is placed on the payment site

(appendix 8). By clearly showing this icon, Nike is trying to create credibility by

using a trustworthy third-party approval which is is a trust that develops between two

parties who might not know each other from before but are willing to trust each other

thanks to the contribution of a reliable third party (Chaffey, 2009) and will hopefully

result in loyalty towards the organisation. This claim is supported by Bowen and

Shoemaker (1998) who’s findings indicate that benefits and trust are the most

important antecedents to customer’s commitment. Furthermore, commitment is

further discussed and claimed to be a necessary condition for loyalty to occur which

shows that there is a connection between trust and loyalty.

Based on the above claims on the importance of trust, the question of whether it is

enough for Nike just to fulfil the basic requirements of trust and security can be

posed. It could also be argued that Nike does offer as much security as possible but

that besides the aspects of third-party approval and use of passwords, it is not

communicated clearly how safe the online shop is. Nike already allows the customers

to make reviews on the products but not on the service and experience with online

transactions. This would be of great advantage to Nike, if the level of security is high

however, as positive WOM would increase the level of trust significantly.

On the other hand it could also be argued that it is not necessary for Nike to place

more emphasis on the security level than already provided since it also functions as a

well-established company with a reputation of a high level of trust and security.

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To conclude, the area of trust and security in an online environment is crucial in order

to create a successful online store. By examining the online store at Nikerunning.com

it is evident that Nike is secured in both in terms of payment and passwords which,

eventually, will result in loyalty. The question of whether Nike should place more

emphasis on communicating their level of trust to the customers can be discussed,

however since Nike’s brand image is so powerful, this might not be necessary as the

level of trust shown by the customers is already high.

4.4 Customer ServiceGrönroos (1996) defines service as:

… an activity or series of activities of more or less intangible nature that normally,

but not necessarily, take place in interactions between the customer and service

employees and/or physical resources or goods and/or systems of the service provider,

which are provided as solutions to customer problems.

It could be argued that Nikerunning.com in itself functions as a service, however

since the community contains an online store, the need for improved service in this

area becomes evident. The fact that Nikerunning.com functions as a virtual

community as well as an online shop is an advantage to Nike since it will be able to

draw from the needs and demands expressed within the forum and thereby adjust the

service to this. By respecting customer needs and giving them a chance to participate

in the offerings on Nikerunning.com, the loyalty among customers will be improved.

Within the online store Nike offers different aspects of service such as multiple

delivery choices, a support line including phone numbers to a large number of

countries, and free shipping on return goods etc.. However, as Chaffey (2009) also

argues that this area needs to be of high quality because if customer expectations are

not met, customer satisfaction will be poor and repeat site visits will not occur thereby

making it difficult to create online relationships. For an organisation like Nike this is

especially important since it is expected, due to its already established image, that the

customer service is well functioning and perhaps even exceeds the basic expectations

for an online store. As Nike is very concerned with keeping a clear consistency

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between their image and its other initiatives the consistency should also be reflected

its service. As previously mentioned Nike is very concerned with communicating that

it offers the customers the opportunity to customise their own products. This aspect

should also be consistent within the service, for example through offering a higher

level of personal service. This view is supported by a survey conducted by IBM

(http://pcworld.com/businesscenter/article/186698/ibm_consumers_demand_more_int

eractivity.html) which shows an overwhelming interest among customers in more

online customisation services. As the service in online transaction often is highly

impersonal due to the lack of personal contact some customers may be driven away

from it, however there are certain aspects that can be helpful in making the online

shopping experience more personal. Nike has already established a call centre that can

help guide the customers in the buying process. Although, as Nikerunning.com is a

virtual community they could easily take advantage of the possibilities that this

presents and establish a live chat where the customers will be able to seek guidance

immediately. This suggestion is also supported by a survey by

(http://www.marketingcharts.com/direct/most-online-shoppers-want-live-customer-

service-10712/) which revealed that 67% of US customers say they would value the

option of having both a live text chat and a live voice conversation to get the help they

need when making online purchases. Besides enhancing the service, thereby resulting

in improved customer satisfaction, a live chat could also be an advantage to Nike

since it might help fasten the buying decision process.

Another way of customising the service according to Score.org

(http://www.score.org/s_cs_10.html) is by giving the sales transactions a personal

touch. This can be done by sending an email after the transaction that contains

product guidelines as well as other products that would be suitable for the customer.

A way of making the customisation possible is by gathering personal information

about the customers when they sign up as members of the community as well as

returning to previous transactions. Thereby Nike would be able to create a somewhat

personal email that shows how the company is taking the specific customer into

consideration, and hopefully improving the relationship between the two parts.

A final advice on how to customise the service at Nikerunning.com could be by

offering products which can only be bought via the community. In that way Nike

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would create an incentive of visiting the site since it offers certain kinds of unique

products. Another advantage is that this would strengthen the feeling within the

community since the customers share something exceptional that cannot be found

elsewhere.

To conclude on the aspect of service it was found that Nikerunning.com offers a

service that completely corresponds with the requirements within the e-loyalty

framework. However as recent studies

(http://www.pcworld.com/businesscenter/article/186698/ibm_consumers_demand_mo

re_interactivity.html) reveal a demand for more customised services Nike should

utilise the advantages of Nikerunning.com and the image they hold. The above

recommendations are relatively easy for Nike to oblige and could potentially have a

positive effect on the customer satisfaction thereby leading to increased brand loyalty.

4.5 Website & Technology According to Gommans, Krishnan and Sheffold (2001) website design factors such as

information content, navigation, and graphic style have an effect on service quality

perception, which in turn influences the satisfaction of the customers. As satisfaction

has a clear effect on loyalty (See appendix 7) these visual aspects are vital to consider

as part of an e-loyalty strategy. Furthermore, based on guidelines on how to improve

the usability done by Nielsen and Tahir (2001) these aspects need to correspond with

the context and purpose of the website.

As Nikerunning.com has more than one purpose, the navigation to the online store is

visually different from the community. The online store is placed at the top along with

links to other Nike websites and the community is placed underneath, resulting in the

online store being what captures the eyes at first glance. However, the fact that the

two different areas are differentiated makes the website more transparent, and thereby

easy to navigate. This is also an aspect that Nielsen and Tahir (2001) highlights as

they argue for the importance of separating elements with different purposes, in order

not to create confusion among the customers. Another aspect in relation to this is that

by separating the online store from the virtual community might result in a positive

effect on the critical consumer, who saw Nikerunning.com as market oriented,

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because he or she will not be exposed to the online store when visiting

Nikerunning.com but will instead have the choice of entering that part of the site.

The clear connection, both in terms of links and the visual aspects to other Nike

websites makes the online experience more consistent and trustworthy as Nike’s

strong brand image shines through. The connection between Nike attributes, which

are apparent in all of Nike’s websites, such as colours, fonts, and navigation bars and

its strong image shows that every little aspect is thought trough (see appendix 5). The

fact that everything resembles Nike’s image makes the experience of visiting

Nikerunning.com complete. It resembles the feeling the customers get when they

enter Niketown which is Nike’s physical stores. Niketown offers an entire experience

from the second customer enter the stores because brings clear associations to Nike’s

image and facilitates different events for the customers, thereby showing them Nike’s

extended brand identity on first hand. The same experience is given at

Nikerunning.com when creating connections to the events at Niketown.

Generally, for a website that contains this many aspects, it is relatively well-arranged

which makes the first impression positive. Moreover, these aspects are important

according to Chaffey (2009) who claim that website design, ease of navigation, good

levels of service and good value products have been found to increase consumer

loyalty and also found to enhance the customer experience.

In relation to the argument that a website should be designed in accordance to its

context, it is obvious that Nikerunning.com is focused on the area of running as this is

clearly communicated visually. However another way of customising a website is

geographically. Nikerunning.com is to some extent customised geographically by

adapting the currency in the online store, which makes it easier to shop and also more

trustworthy for the customers because foreign currencies might cause some insecurity.

However when it comes to the content neither the online shop nor the community is

adapted to every customer’s nationality, it is all in English, which makes it less

personal. As mentioned, one of the aims around a virtual community is to create a

feeling of social belonging by making the members able to relate to others. The fact

that the members communicate across boarders and cultures may be exciting to some,

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however at the same time it would be beneficial to make it possible for the members

to interact with people from their own nationality, since not everyone are able to

communicate in English. Futhermore, this would also make the members able to

relate even more to each other’s activities since they are able to experience the same

things. Chaffey (2009) discusses the aspect of usability, where he argues that all users

should be able to interact regardless of disabilities. By not offering forums within

each country some customers will automatically be lost due to their lack of ability to

communicate in English, even though they should be considered loyal. Additionally,

as a further element of customer-centricity for website design Chaffey (2009) refers to

this as localisation. Localisation covers the aspect of specific content for particular

countries which, besides language, also deals with different product needs and

cultural differences. Regarding the product range, it seems that it is the same products

that are offered everywhere since the shipping originates from the US. In theory it is

an advantage that all products are accessible to everyone but it might prove useful to

highlight specific products that are useful in certain countries, for example in terms of

weather- and running conditions. This would function as an extra help in the

customer’s shopping experience and additionally ease the process, which may result

in more satisfied customers. These suggestions are supported by Chaffey (2009) who

argues that social presence or the feeling that a communication exchange is sociable,

warm, personal and active may be lower if a standard web page is delivered, but can

be enhanced, perhaps by personalisation.

The navigation on Nikerunning.com clearly differentiates the online shop from the

forum, which makes it more trustworthy since the customers will not be directly

exposed to the products when entering the forum.

In relation to the physical aspects it was found that there is a clear connection between

the different Nike websites as well as with the physical stores. The fact that the image

shines through gives the customer a feeling of their strong image which could

possibly strengthen the loyalty.

The website content is only partly customised but in order for all customers to be a

part of Nikerunning.com it would be beneficial to take into consideration that not

everyone is able to communicate in English and thereby adapt the language. By

allowing people from the same nationality to interact more easily would also make the

Nikerunning.com more relatable.

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4.6 Conclusion on analysisGomman’s, Krishnan’s, and Scheffold’s framework on e-loyalty provided a guideline

of how to analyse whether Nikerunning.com was a successful virtual community from

a theoretical perspective. Supported by various theories it can be established that

Nike’s virtual community is very professional and consistent will all the other Nike

initiatives. In terms of customisation there are certain aspects that could be improved

in order to enhance the customer satisfaction and thereby the loyalty. However

generally Nikerunning.com, from a theoretical point of view is doing a successful job

that most likely will result in enhanced brand loyalty among its customers.

5. Conclusion

This study sought to discuss the concept of brand loyalty and how this can be created

within a virtual community. Secondly the objective was to determine whether Nike’s

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virtual community Nikerunning.com, from a theoretical perspective, can be

considered successful.

The discussion on the concept of brand loyalty revealed that there are many different

opinions on how it should be defined. Some researchers argued that loyalty can be

measured in different degrees whereas others claimed that loyalty is either existing or

not. Furthermore, it was found that brand loyalty can be divided into two categories;

behavioural loyalty and attitudinal loyalty. Behavioural loyalty is measured in terms

of repeat purchasing patterns whereas attitudinal loyalty is measured in accordance to

operational findings, meaning that it is based upon a customer’s commitment and

preferences of a brand. Some authors argue that both of these categories should be

considered when measuring brand loyalty, and therefore the most accurate result will

be found by combining the two.

Even though there are different views on how to define brand loyalty, the objectives

behind it are somewhat the same. Brand loyalty equals retention which, in a world of

fierce competition, is crucial in order not to loose customers. With increased brand

loyalty among customers follows reduced costs in terms of attracting new customers

but also due to the fact that loyal customers are less price sensitive and therefore

allowing for higher prices to be charged.

The concept of brand loyalty was examined in the context of a virtual community.

Through the analysis on Nikerunning.com, it became apparent that loyalty can be

created in multiple ways through a virtual community. Firstly, an online forum can

serve to create a long-term relationship with the customer and thereby increased brand

loyalty through the interaction that is taking place between the company and the

customer. Secondly, establishing a virtual community that are to fulfil certain

customer needs, for example guidance on how to best utilise the products, creates

goodwill as it can be seen as an extra service, thereby also leading to increased brand

loyalty. Finally a very important feature of a virtual community is that is allows for

customisation that is difficult to establish elsewhere. The customisation was created

for the customers by participating in the discussions, where they will be able to get

inspiration and guidance specially adjusted to their needs. This was found to lead to

increased satisfaction thereby leading to brand loyalty.

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The second objective within this thesis was to conduct an analysis that was to

determine, on a theoretical perspective, whether Nike’s virtual community

Nikerunning.com can be considered successful. Based on a framework on how to

create e-loyalty it was found that the community is very professional created due to its

visual aspects that are clearly connected to Nike’s other websites as well as the

navigation which is simple and user-friendly. The critique that were to place upon

Nikerunning.com is that the use of customisation is somewhat lacking and could be

improved due to the fact that this is a effective way of creating brand loyalty.

Generally Nikerunning.com, on a theoretical perspective, can be considered

successful due to its many professional aspects and its way of creating interaction

with the customers.

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Bowen, J. T., & Chen, S.: The relationship between customer loyalty and customer

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Bowen, T. J. & Shoemaker, S.: Loyalty: A Strategic Commitment. In: Cornell

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Buhr, Vivien. 2001.

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7. Appendix 1

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8. Appendix 2

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9. Appendix 3

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10. Appendix 4

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12. Appendix 5

From Nikerunning.com

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From Nike.com

12. Appendix 6

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13. Appendix 7

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14. Appendix 8

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15. Appendix 9

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